As venture-backed IPO activity for biotech companies hit a fever pitch in 2013 and remain hot in 2014, venture capital investments into the healthcare sector also saw momentum — hitting $6.4 billion across 550 deals last year. While healthcare VC funding and deals tallies fell 2% and 7% on a year-over-year basis, 2013 ended on a strong note, as healthcare VC funding saw its best quarter of the year in Q4 after a slide in Q3.
Given the continued surge in healthcare IPOs, we wanted to take a look at investment trends including the top states, industries and stages observed across the healthcare VC ecosystem (medical devices, pharma, biotech) in 2013. For more VC financing and exit data across all sectors and U.S. tech hubs, see the full 2013 Venture Capital Activity and Exits Report.
HEALTHCARE FINANCING TREND BY INDUSTRY
Medical devices took 37% of healthcare VC deals in 2013, followed by drug development and biotech companies, which each secured 15%+ of deal share. Combined, the top 3 industries took nearly 7 of every 10 healthcare deals last year. More broadly, healthcare VCs pursued deals in a diverse set of markets including medical facilities & services, pharmaceuticals, disease diagnosis and dental products & services.
HEALTHCARE FINANCING TREND BY STAGE
In 2013, Series A investments took the highest percentage of healthcare deal share and saw a slight jump from 2012 levels (despite lower seed VC deal levels). Series C and Series D deal share each fell on a year-over-year basis.
From a funding perspective, healthcare dollars at the Series A and Series B stages saw a rise in share compared to 2012. Late-stage funding share saw a mixed 2013 as Series D rounds in the healthcare sector saw the largest drop across the spectrum, healthcare companies at the Series E+ stage saw funding share increase from 19% in 2012 to 22% in 2013.
HEALTHCARE FINANCING TREND BY GEOGRAPHY
While the share of the largest venture-backed healthcare exits is shifting toward Massachusetts, California topped all states by healthcare venture deals in 2013. As a testament to their dominance of the healthcare VC market, California and Mass. combined to take 1/2 of all healthcare deals last year. Pennsylvania, which is developing a growing life sciences hub, took 6% of all deals.
Peeling back the top cities by healthcare VC deals and deals, we see that Cambridge, Mass. alone took nearly 9% of all healthcare deals last year with San Diego and San Francisco rounding out the top 3.
For more healthcare VC financing and exit data and analytics, check out the CB Insights Venture Capital Database. Sign up for free below.